Australian Pension Merger Trend Continues

Australian superannuation funds First State Super and WA Super have announced they’ve begun discussions regarding the possibility of a merger.

Their announcement marks the continuation of a trend in the region where many superannuation funds have announced they’re looking to do the same thing. First State Super is already in the process of merging with VicSuper to form an A$120 billion ($84 billion) fund by June 30. Other funds which have announced their intentions to merge are Equip and Catholic Super, SunSuper and Qsuper, and the Rio Tinto Staff Superannuation Fund and Equip.

“Through the benefits of increased size and scale, First State Super and WA Super members will be supported to prepare for the kind of retirement they deserve, through strong, sustainable long-term investment returns, reduced fees over time, and access to innovative products and services to support their needs, now and into the future,” the funds said in their joint news release.

The country’s parliament has frequently endorsed the consolidation of retirement consortiums for the sake of simplicity. Underperforming funds have been the focal point of intense scrutiny by the region’s legislators, leading to new legislation that would call upon the board to consider the best interests of plan members.

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“We recognize in the current superannuation environment that size can make a difference. With size comes scale, which can have a significant impact on our members’ fees, returns, and ultimately their long-term retirement savings,” WA Super CEO Fabian Ross said in a statement.

“Should this merger proceed, the outcome would be to provide our members with the knowledge and reassurance that their retirement savings will be in safe hands, and that First State Super will continue to help them achieve the retirement dream they want and deserve,” Ross said.

The due diligence process for the merger is expected to be completed by the middle of 2020. If completed, the merged fund would have approximately 60,000 members, with about 8,000 coming from First State Super.

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Tags: Australia, First State Super, merge, Pension Funds, Superannuation Funds, WA Super

Jack Ehnes, photo courtesy of CalSTRS

Jack Ehnes, CEO of the $252.4 billion California State Teachers’ Retirement System (CalSTRS) announced at the pension fund’s board meeting Thursday that he plans to retire after more than 18 years at the helm. Ehnes said he will step down September 1 to give the fund’s board time to find a successor.

“I have reached that crossroads in life for some more adventures,” Ehnes said at the board meeting. “After much thinking, reflection, talking with family, it just felt like this was the right time to do this.”

Ehnes joined CalSTRS as CEO in February 2002.

“Almost my entire work life I have either been on a board or worked for a board,” Ehnes told the board. “Without doubt, I think the trust that we’ve established with you and the accountability that you demand from us has been special, and I can honestly say that we have all learned a lot together, and we’ve made sure the system has stayed honest.”

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Ehnes is currently chairman of the FTSE Green Industries Advisory Committee and vice chair of the FTSE Sustainable Investment Advisory Committee in London. He is also the board vice chair of the Global Reporting Initiative (GRI) in Amsterdam. He currently serves on the boards of Ceres, which is a network of investors and environmental organizations, and is a past president of the National Council on Teacher Retirement. He also serves as a public governor on the Financial Industry Regulatory Authority in Washington, D.C.

“Under Jack’s leadership, CalSTRS has weathered the challenges of financial market downturns and pension reform efforts. He has also been a global leader on sustainability,” CalSTRS board Chair Sharon Hendricks said in a statement. “I believe his biggest contribution has been his commitment to diversity and developing highly skilled staff at every level. He is leaving us with a capable team of professionals who will carry on the mission of CalSTRS. That is his legacy.”

Before joining CalSTRS, Ehnes was vice president, corporate affairs at insurance firm Great-West Life, and prior to that he was director, state risk management and employee benefits for the state of Colorado.

“Through my nearly 19 years, the organization has changed a real lot,” Ehnes said. “We changed a lot in 2002 from top to bottom, and then we changed again, and again, and again,” he said, adding that “this is an organization that doesn’t have that embedded resistance to change,” and “there’s a recognition that improvement matters a lot to everyone.”

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Tags: California Teachers’ Retirement System, CalSTRS, Jack Ehnes, retire, Sharon Hendricks